The story of Lenovo casts doubt on all these postulations. Yes, China lacks efficient legal and financial institutions, but it has access to them – in Hong Kong. Take the view that formal finance does not matter. The management of Lenovo certainly would not agree with this. The firm raised more than US$12 million from its Hong Kong IPO. Formal finance – and the institutions supplying it – is absolutely essential to the success of Lenovo. Informal finance might be sufficient to start small kiosk businesses or simple production, but it is not adequate for firms to acquire modern production
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